Airfares soar at airports with flight caps

October 29, 2008

Airfares shot up 12 percent on average for flights at O'Hare International Airport in the second quarter as the cost of plane tickets nationwide soared to record heights, according to federal data released today.

Nationally, consumers paid an average of $352 per round trip during the second quarter, up 8.1 percent from the prior year and the highest amount on record in the 13 years that the Bureau of Transportation Statistics has tracked ticket prices.

Travelers at O'Hare paid slightly more: $360 per trip within the U.S., BTS data show. While that's a significant increase over average ticket prices at the airport in recent years, it is still less than the $406.74 that passengers paid at O'Hare during the same period in 2000.

For much of this decade, airlines had struggled to raise ticket prices as consumers combed the Internet for the lowest fares.

Prices started to rise during 2007, however, along with airlines' fuel bills. Fuel costs peaked over the summer when oil topped $140 per barrel in early July, but have since plummeted to about half that amount.

Even so, ticket prices are expected to rise even higher this fall as carriers slash capacity to counter falling demand for air service as the economy stalls, analysts said.

That's a stark change from previous economic slowdowns, when airlines slashed prices in an attempt to keep planes full.

Now, carriers are grounding planes on an unprecedented level and reducing flying in a bid to keep expenses under control and ticket prices at levels where they can make money.

"They're on top of this: United Airlines and the other guys," said Michael Derchin, airline analyst with FTN Midwest Securities Inc. "I've never seen them behave this disciplined before. I don't see any signs of a change here."

Ticket prices are also rising at a faster rate at airports where the government has imposed hourly limits on the number of flights to reduce delays, U.S. Transportation Secretary Mary Peters said while announcing the new airfare data during a news conference at O'Hare.

Flight caps that have been in place at O'Hare since 2004 are set to expire on Friday. Designed to ease congestion, the caps limited O'Hare arrivals to 88 per hour during peak weekday travel periods.